Exam 6: Inventories

GAAP's definition for inventory and provision of guidelines for inventory accounting as compared to IFRS are: Guideliness for A) Definitions for Inventory more detailed B) essentially similar more detailed C) essentially different less detailed D) essentially different less detailed

Companies adopt different cost flow methods for each of the following reasons except

The following information was available for Pietee Company at December 31 2016: beginning inventory $90000; ending inventory $70000; cost of goods sold $968000; and sales $1360000. Pietee's days in inventory in 2016 was

The option to value inventory at fair value exists under A) Yes No B) Yes Yes C) No No D) No Yes

In a period of falling prices the LIFO method results in a lower cost of goods sold than the FIFO method.

Which of the following items will increase inventoriable costs for the buyer of goods?

If companies have identical inventoriable costs but use different inventory flow assumptions when the price of goods have not been constant then the

LIFO can be used

Weinstein Company identifies the following items for possible inclusion in the physical inventory. Indicate whether each item should be included or excluded from the inventory taking. 1. Goods shipped on consignment by Weinstein to another company. 2. Goods in transit from a supplier shipped FOB destination. 3. Goods shipped via common carrier to a customer with terms FOB shipping point. 4. Goods held on consignment from another company.

Under GAAP companies can choose which inventory system? A) Yes No B) Yes Yes C) No Yes D) No No

Harpo's Used Cars uses the specific identification method of costing inventory. During March Harpo purchased three cars for $12000 $14400 and $19200 respectively. During March two cars are sold for a total of $36400. Harpo determines that at March 31 the $14400 car is still on hand. What is Harpo's gross profit for March?

The manager of Stone Company is given a bonus based on income before income taxes. Net income after taxes is $11500 for FIFO and $10100 for LIFO. The tax rate is 30%. The bonus rate is 15%. How much higher is the manager's bonus if FIFO is adopted instead of LIFO?

Inventories are defined by IFRS as

Jeff Franklin a new employee of Bail Company recorded $1800 in consigned goods received as part of the firm's inventory. The goods were received one day after the end of the fiscal period but Jeff reasoned that the goods should be included in inventory sooner because Bail paid the freight. The mistake was brought to his attention by the purchasing department who said the goods should not have been recorded as Bail inventory at all. Jeff told Jessie Sassoon the purchasing supervisor that nobody needed to worry because the mistake would cancel itself out the following month. In Jeff opinion there was no reason to get everyone excited over nothing especially since it was monthly and not annual financial statements that were affected. Jessie Sassoon has reported the problem to the accounting department. Required: You are Jeff's supervisor. Write a memo to Jeff explaining why the error should have been corrected.

The lower-of-cost-or-market (LCM) basis may be used with all of the following methods except

E. Preslay Company prepares monthly financial statements and uses the gross profit method to estimate ending inventories. Historically the company has had a 40% gross profit rate. During June net sales amounted to $200000; the beginning inventory on June 1 was $60000; and the cost of goods purchased during June amounted to $90000. The estimated cost of E. Preslay Company's inventory on June 30 is

At May 1 2016 Bibby Company had beginning inventory consisting of 200 units with a unit cost of $7. During May the company purchased inventory as follows: 800 units at $7 500 units at $9 The company sold 500 units during the month for $12 per unit. Bibby uses the average cost method. Bibby's gross profit for the month of May is

In a period of rising prices FIFO will have

IFRS defines market for lower-of-cost-or market as

The cost of goods available for sale is allocated between